Part 12Accrued income profits
Chapter 2Accrued income profits and losses
Further transactions treated as transfers
648Strips of gilt-edged securities
1
The exchange of a gilt-edged security for strips of that security is treated for the purposes of this Chapter as a transfer of the security by the person who exchanges the security.
2
But no one is treated as the transferee.
3
The exchange of strips of a gilt-edged security for a single gilt-edged security consolidating those strips is treated for the purposes of this Chapter as a transfer of the single security to the person who exchanges those strips.
4
But no one is treated as the transferor.
5
An exchange within subsection (1) or (3) is treated as a transfer without accrued interest if it is made at any time after the balance has been struck for a dividend on the security but before the day on which that dividend is payable.
6
In any other case, such an exchange is treated as a transfer with accrued interest.
7
If an exchange is treated as a transfer under subsection (1) or (3), any transaction forming part of the exchange is not itself a transfer for the purposes of this Chapter.
8
In this section “strip” has the meaning given by section 444 of ITTOIA 2005.
9
For the meaning of “gilt-edged security”, see section 1024.
649New securities issued with extra return
1
This section applies if—
a
securities (“old securities”) of a particular kind are issued by way of an original issue of securities of that kind,
b
on a later occasion securities (“new securities”) of the same kind are issued,
c
a sum (“the extra return”) is payable in respect of the new securities by the issuer of them to reflect the fact that interest is accruing on the old securities,
d
the issue price of the new securities includes an element (whether or not separately identified) representing payment for the extra return, and
e
the extra return is equal to the amount of interest mentioned in subsection (2).
2
The amount of interest referred to in subsection (1)(e) is—
a
the amount of interest payable for the relevant period on so many old securities as there are new, or
b
if there are more new securities than old, the amount of interest which would be so payable if there were as many old securities as new.
3
This section does not apply if the new securities are variable rate securities.
4
The new securities are treated as transferred with accrued interest to the person to whom they are issued on the new issue day.
5
But no one is treated as the transferor.
6
For the purposes of this Chapter, the settlement day for the transfer is taken to be the new issue day.
7
See section 662 for the amount of the payment treated as made in the case of the transfer.
8
In this section—
“the relevant period” is the period beginning with the day after—
- a
the only or last interest payment day before the new issue day, or
- b
if there is no interest payment day before the new issue day, the day on which the old securities are issued,
and ending with the new issue day, and
- a
“the new issue day” is the day on which the new securities are issued.
650Trading stock appropriations etc
1
Subsection (2) applies if a person—
a
acquires securities otherwise than as trading stock of a trade the person carries on, and
b
appropriates the securities as trading stock for the purposes of such a trade (whether on the start of the trade or otherwise).
2
The person is treated for the purposes of this Chapter as transferring the securities otherwise than in the course of the trade, and re-acquiring them in the course of the trade, on the day of appropriation.
3
Subsection (4) applies if securities—
a
form part of the trading stock of a person's trade, and
b
are appropriated by the person for any other purpose.
4
The person is treated for the purposes of this Chapter as transferring the securities in the course of the trade, and re-acquiring them otherwise than in the course of the trade, on the day of appropriation.
5
Subsection (6) applies if securities—
a
form part of the trading stock of a person's trade, and
b
are retained by the person on ceasing to carry on the trade.
6
The person is treated for the purposes of this Chapter as transferring the securities in the course of the trade, and re-acquiring them otherwise than in the course of the trade, on the day of cessation.
7
See sections 623(2) to (4) and 624(2) to (4) for cases where securities are treated as transferred with or without accrued interest where this section applies.
651Owner becoming entitled to securities as trustee
1
This section applies if a person entitled to securities otherwise than as trustee becomes trustee of them.
2
The person is treated for the purposes of this Chapter as transferring the securities at the time the person becomes trustee of them.
3
The transfer is treated as being made—
a
by the person in a capacity other than trustee, and
b
to the person and, if there are any other trustees, to the others in the capacity of trustees.
4
See sections 623(2) to (4) and 624(2) to (4) for cases where securities are treated as transferred with or without accrued interest where this section applies.
652Securities ceasing to be held on charitable trusts
1
This section applies if securities held on charitable trusts cease to be subject to those trusts.
2
The trustees are treated for the purposes of this Chapter as transferring the securities at the time when the securities cease to be so subject.
3
The transfer is treated as being made by the trustees in their capacity as charitable trustees to themselves in another capacity.
4
See sections 623(2) to (4) and 624(2) to (4) for cases where securities are treated as transferred with or without accrued interest where this section applies.